connection. Standard Chartered’s global head of client access, Gautam Jain, pointed out that the time-lag to connect has a cost. ‘If it takes six months to implement after a deal then we have a six month wait to realise the revenue.’ Bank of America Merrill Lynch started working with
SAP around the start of 2012, said the bank’s global head of integrated channels, Tom Durkin, and he saw potential for existing clients as well as for new business. It was about bringing services to customers more quickly, he said, and moving from point-to-point to one-to-many connectivity was the ‘next step’. However, SAP and the banks were keen to emphasise that FSN is not only about ease of connectivity. ‘Reconciliation for our clients is the single biggest cost after the payment,’ said Jain. He foresaw FSN bringing significant improvements here. RBS’s head of UK channels, George Evers, also foresaw a tie- up between FSN and trade documents that could bring banks more into the supply chain. With regards Swift, Chikarmane felt its core competency was as a financial messaging company for bank-to-bank communications and this was not where SAP was planning to compete. And in terms of unlocking corporate customers and making it easier for them to move, the banks were all singing from the same hymn-sheet: connectivity is not where they compete. The industry started debating this when ‘Swift for corporates’ came up, said Deutsche Bank’s head of client access, David Watson, and that debate had moved on. ‘The paradigm shift has happened already.’ In an update provided on the initiative in mid-2013,
SAP’s solutions manager, Rob Grimes, said FSN had been in a ‘controlled launch’ phase since 21st March 2013, with a number of banks involved and end-to-end execution of some test payment messages. SAP’s own treasury operation was involved in the tests. While there was the technology at both the bank and corporate side, typically SAP’s Bank Communications Management component of its ERP suite at the latter, there was also the network to test, which was not SAP’s traditional domain, and the finalisation of commercial discussions and contract details. The service was being tested to SAP’s rigid processes, said Grimes, and he confirmed there would be a joint go-to-market strategy, with SAP taking the proposition directly to its corporate customers, as well as this happening via the banks. ‘It will be a kind of co-branding.’ The banks that were named at Sibos remained the ones involved, Grimes said, with 40 to 50 corporates having also shown an interest. He affirmed the pricing model would be a fixed fee for banks, with no limit on volumes or number of corporates, and a volume-based fee for corporates. There would be other fees for value-added services. It is a membership-type approach, said Grimes, and would be
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agreed on an account-by-account basis, so SAP was not going public on the fees. ‘At the moment, we feel very competitive,’ he said.
The first focus was the ‘bread and butter-type services’ of
payments and statements, said Grimes. The ability to build value-added services on top would follow in the first half of the following year. This would be in areas such as supply chain finance, including giving banks visibility of data and cash positions from the ERP systems for services such as purchase order discounting. There would also be tools for analysis and decision-making, master data management and reconciliation. There would be a development platform and an iPad app. He also confirmed there would be synergy with Ariba. ‘We are still working out the strategy but we expect to see banks able to integrate into the B2B space,’ said Grimes, with this due to occur some time the following year. One year after the launch, the same banks were still talking positively about FSN, although actual progress was hard to spot. By now, financial data integration specialist, Volante, had been selected by SAP to provide the integration layer, supporting validation, mapping, transformation and enrichment of messages (Volante supports proprietary messaging formats as well as a range of industry standards including SEPA, Fedwire, Swift MT, EDI and ISO 20022). The vendor was selected as a result of a competitive tender, said Mick Fennell, Volante’s general manager, MEA. Volante would form a key technology part of the FSN set-up, he said, and would enable banks and corporates to reduce the time and costs of onboarding.
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